India’s REC (Renewable Energy Certificate) Market is facing a huge backdrop as no strict guidelines are given by state regulators to ensure the compliance of Renewable Obligation defined under RPO Regulation 2010.

In the recent REC trade session held on 24th September 2014 only 22650 Non-Solar REC’s and 1363 Solar REC’s were sold, were as available non-solar REC’s for sale was 90 Lacs and the same in case of Solar was 3.70 lacs. Out of 93 Lac REC’s, which were available for sale, only 24 thousand REC’s were redeemed which is barely close to .25%.

The current scenario of REC market is quite uneventful, REC inventory is racing to new highs, while there is very little response from the buyers (Mainly distribution companies). The absence of strict RPO enforcement is leading to poor trading and reduction in the interests of RE Generators, especially Solar.

In order to bring this issue in to the light, the Indian Wind Energy Association and the Indian Wind Turbine Manufacturers Association, through a petition, have requested before the APTEL (Appellate Tribunal for Electricity) to direct the state regulators to issue strict guidelines for RPO compliance, and ensure rigid timelines for compliance. The response of APTEL is to be watched, as the REC Market clings on the edge, hoping for demand to rise in the forthcoming months.

Recently though, state regulators of Uttarakhand, Gujarat and Punjab have taken a stern stand for the RPO compliance, while in some other states there is no mention of RPO compliance. If the market does not revive soon, there is a chance of it to fall in the wrong lines of the CDM market.

As per an article in Economic Times, the center has asked the appellate tribunal to allow MNRE to be a party in a petition jointly filed by wind associations IWEA and IWTMA. This petition filed by the wind associations in January submits that all state commissions have failed to enforce RPO regulations in their respective states. The center while filing the request to APTEL, has highlighted that despite writing repeatedly to all SERCs and distribution companies, none have complied with their envisioned RPO targets. Owing to these delinquencies on the part of SERCs, the ministry is forced to take a stricter route.

The move comes in the backdrop of poorly performing REC markets which are struggling with lower demand. The REC inventory is already flooded with more than 30 lac RECs. Off late, both solar and non-solar RECs have remained at floor. Already majority SERCs have started coming up with stricter compliance regime which mostly, mandate all obligated entities of the state to comply with all backlogs by the end of FY14. Nevertheless, the demand of RECs in subsequent trading sessions left in FY14 is expected to rise.